The Tycoon Report

The Money is Always Greener on the Other Side

Tuesday, October 23, 2007 | Jason Jovine

You hate your broker and/or your financial newsletter, don’t you?  Come on, be honest.

The reason you hate them is because you feel that you are missing out.  Some days you see the market going higher, and you say to yourself, why didn’t my stupid broker take advantage of that market today?  He could have:

1.    Bought some stocks
2.    Bought some call options
3.    Sold some put options

Just to name a few.  Instead he was probably on the golf course spending the money that you paid him in commission.  Sound familiar?

What about when the market goes lower?  That is a convenient reason for your broker to tell you why he couldn’t make you money.  He could have:

1.    Shorted some stocks
2.    Bought some put options
3.    Sold some call options.

Let me let you in on a secret, folks.  You can make money when the market is going up or down.  If anyone is telling you differently, they are lying to you.  If they are using the market as an excuse for not making you money, it means that they are lazy and/or incompetent. 

Above, I gave you a few very basic strategies for making money.  There are, of course, many more complex strategies, but I am just trying to make a point.

Why is this happening, and what could and should you do about it?

This is happening because you allow it to.  It’s just like going to a doctor.  Nowadays, when you go to the conventional doctor, you are in the waiting room for 30 minutes to an hour.  When you finally get into an examining room, the doctor doesn’t listen to a word that you say and just prescribes some medication and sends you on your way.  Sound like a legal drug dealer to you?  Think about it.

On the other hand, if you'd gone to see your doctor with a pad and pen in your hand, and you asked questions, wrote down the answers, and generally were more involved in your care, you may have ended up with better care.

The same can be said for investing.  You need to be actively involved with the management of your money, whether you get your information from a broker of through a newsletter.

If the broker or newsletter is not user-friendly, then you should find another one.  In other words, the best types of professionals are the ones who want you to understand what is going on.  They want to educate you so that you can see where they are going.


If you have a broker...

I remember before I started my career on Wall Street, I had this lady who worked at one of the well-known Wall Street firms managing the little money that I had.  She bought me a stock at about $30 per share, and the stock went down a little bit more each day.  It eventually settled at $5 per share and never came back.

This lady never called me to tell me what was going on with the company, nor did she protect my downside on the stock.  She could have put in a sell stop order when she initially bought the stock, or she could have bought a put option with the stock.  She did neither; she was negligent.

I used her before I knew anything about the market.  I didn’t have a lot of money, let alone with her, and as a result, she neglected my account because I wasn’t one of her big clients.

Speak with your broker at least once a month. 

You should also review all of your account statements to make sure that everything is going OK. 

Make sure to understand at least the basics of investing as well as what tools are available to you to limit your risk and increase your reward.  Stay on top of your money! 

If you show that you care about yourself, then others will follow suit.  If you act disinterested, then they will as well.  People usually treat you the way you treat yourself!


If you are using a newsletter...

A newsletter is not allowed to give personal financial advice, so don’t expect it to.  A newsletter that you want to subscribe to is one that:

1.    Is right more than it is wrong with its trades.
2.    Admits when it makes mistakes.
3.    Offers a fair refund policy.
4.    Answers your questions in a timely manner.
5.    Tries to make you a better investor, trader, and business person on top of giving you good money-making trades.

Unless you were born yesterday, you know that no one will be right 100% of the time.  All you can expect when you pay money for advice is that the person that you look to for that advice will be right a lot more than he or she will be wrong.

I spoke with a person not too long ago who left a newsletter that had a track record of being right approximately 80% of the time with its trades because he happened to buy most of the 20% of the trades that didn’t work out.

He actually blamed the newsletter for his losses.  He decided to leave the newsletter because he heard of another newsletter that was making people “spectacular profits.”  Instead of realizing that the newsletter that he had was a great newsletter, he felt that the grass would be greener on the other side.  Can you relate?

Until the next time, folks, spend your hard-earned money wisely.






Jason Jovine
Contributing Editor
The Tycoon Report